Unit 2

Benefits of Strategic Management

 Clearer sense of strategic vision
 Sharper focus on what is strategically
important
 Improved understanding of rapidly
changing environment
Benefits of Strategic Management
It refers to identification and description of the
strategies that managers can carry so as to achieve
better performance and a competitive advantage for
their organization

 Competitive advantage is its profitability is higher

than the average profitability for all companies in its
industry.
Benefits of Strategic Management
 The manager must have a thorough knowledge and
analysis of the general and competitive organizational
environment so as to take right decisions.

 Conduct a SWOT Analysis (Strengths, Weaknesses,

Opportunities, and Threats) and make best possible
utilization of strengths, minimize the organizational
weaknesses, make use of arising opportunities from
the business environment and shouldn’t ignore the
threats.
Benefits of Strategic Management
 Set the objectives and proceed about attaining them

 It deals with making and implementing decisions about

future direction of an organization & helps us to identify
the direction in which an organization is moving

 It also is a continuous process that evaluates and controls

the business & the industries in which an organization is
involved; evaluates its competitors and sets goals and
strategies to meet all existing and potential competitors;
and then reevaluates strategies on a regular basis
Role
 It is a broader perspective to the employees of an
organization and they can better understand how their job
fits into the entire organizational plan and how it is co-
related to other organizational members

 An art of managing employees in a manner which

maximizes the ability of achieving business objectives

 Understanding the reaction of environmental changes on

the organization & the probable response of the
organization; thus the employees can judge the impact of
such changes on their own job and can effectively face the
changes
Role
 Role of strategic management is to incorporate various
functional areas of the organization completely, as well
as, to ensure these functional areas harmonize and get
together well

 The managers and employees must do appropriate

things in appropriate manner They need to be both
effective as well as efficient.
Composition of Strategic Management
1. Environmental scanning
2. Strategy formulation
3. Strategy implementation
4. Evaluation and control
Environmental
scanning
Strategy
formulation
Strategy
Implementation
Evaluation and
Control
Strategy
 Strategy is an action that managers take to attain one
or more of the organization’s goals.
 A general direction set for the company and its various
components to achieve a desired state in the future
 Its all about integrating organizational activities &
utilizing and allocating the scarce resources within the
organizational environment so as to meet the present
objectives
Features of Strategy
1. Strategy is Significant because it is not possible to
foresee the future. Without a perfect foresight, the
firms must be ready to deal with the uncertain
events which constitute the business environment
2. It deals with long term developments rather than
routine operations, i.e. it deals with probability of
innovations or new products, new methods of
productions, or new markets to be developed in
future
Features of Strategy
3. It is created to take into account the probable
behavior of customers and competitors. Strategies
also deals with employees & predict employee
behavior

 Strategy is a well defined roadmap of an

organization
 Overall mission, vision and direction of an
organization is laid out
Features of Strategy
 It is to maximize an organization’s strengths and to
minimize the strengths of the competitors

Strategy between “where we are” and

“where we want to be”
3 Big Strategic Questions
 Where are we now?
 Where do we want to go?
 How will we get there?
The HOWs that define a Firms Strategy
 How to please customers
 How to respond to changing market conditions
 How to outcompete rivals
 How to grow the business
 How to manage each functional piece of the business
and develop needed organisational capabilities
 How to achieve strategic and financial objectives
Strategic Priorities of McDonald’s
 Continued growth
 Providing exceptional customer care
 Remaining an efficient and quality producer
 Developing people at every organizational level
 Sharing best practices among all units
 Reinventing the fast food concept by fostering
innovation in the menu, facilities, marketing,
operation and technology
Why are Strategies needed?
Proactively shape how
a company’s business
will be conducted

To mold the independent

actions and decisions of
managers and employees into
a coordinated , company-
wide game plan
Hierarchy of Strategy
 To describe the relationships among the 3 levels of
strategy:

 Corporate
 Business
 Functional

 Each level of strategy forms the strategic environment

of the next level in the corporation
CLASS ASSIGNMENT
QUESTION